The Member Short Ratio ("MSR") is a market sentiment indicator that measures the short
selling activity of members of the New York Stock Exchange. "Members" trade on the floor
of the exchange either for their own account or for their clients. Stocks are sold short
in anticipation of the price falling.

Knowing what the "smart money" is doing (e.g., members) is often a good indication of
the near-term market direction.

The MSR is the inverse of the Public Short Ratio. This
is because there are only two players in the market, the Public and the Members (Members
are further divided into Special-ists and Others). When the Public Short Ratio is 20%, the
Member Short Ratio must be 80%.

Interpretation

Because the MSR is the inverse of the PSR, interpretation of the MSR is the opposite of the
PSR. When the members are short (a high MSR), you should be short and when the members are
long (a low MSR), you should be long. For more information on interpreting the MSR, refer
to the discussion on the Public Short Ratio.

Calculation

The Member Short Ratio is calculated by dividing the number of member shorts (defined as
total short sales minus public short sales) by the total number of short sales. The
resulting figure shows the percentage of shorts that were made by members of the New York
Stock Exchange.